DALLAS (CBSDFW.COM) – For the first time ever, oil futures sold for less than zero.

Bernard Weinstein of SMU’s Maguire Energy Institute says the oil patch has certainly hit a rough patch.

“I’ve been following the industry for almost 50 years. I have never seen anything like this.”

Because of the COVID-19 outbreak, local and state governments have forced most businesses to close and most people to stay home, creating a massive glut of oil.

Regarding the historically low oil futures, Professor Weinstein said, “If I have oil and I want to sell it to you for delivery in May I will pay you to take my oil. In other words, the seller is willing to pay the buyer to take the oil. But there aren’t a lot of buyers out there right now. That’s why the price went below zero. Even if there were buyers out there, there’s not enough storage for the oil being produced.”

Put another way, the price of oil on the futures market dropped so low that a bottled water at $1.79, costs more than a barrel of crude oil.

Demand for oil has plummeted by 30 million barrels a day worldwide.

OPEC, Russia, the U.S. and other countries have agreed to cut production by between 10 and 15 million barrels a day, but that still leaves 15 to 20 million barrels a day being produced.

On Tuesday, the Texas Railroad Commission may vote to cut oil production by up to two million barrels a day, but Weinstein said

“That’s not going to be enough to influence the price. It wouldn’t mean much.”

He said demand for oil is the only way to pull the industry out of its funk.

Consumers can expect to see prices at the pump drop further in the next week or two to a dollar a gallon for unleaded regular or even lower.

Weinstein predicted gas prices could stay below $1.50 a gallon for the next several months until demand for oil picks back up.

To keep the U.S. oil industry healthy, Weinstein said the price of a barrel of crude oil needs to be between $40 and $60.

That’s still higher than where crude is being priced for the next several months. “If you look at prices for 3 to 6 months from now oils in the $22 to $30 range which is very, very low.”

He said he worries many of the independent oil companies will go out of business.

“We’re losing tens of thousands of jobs up and down the supply chain and state and local governments are out billions of dollars of revenue and we’re going to feel that in the months and years ahead.”

Texas Comptroller Glenn Hegar issued the following statement on this historic drop in oil prices:

“Today’s market activity was unprecedented and likely indicative of very limited storage capacity. May contracts traded well into negative territory as the market prepares to shift focus to June contracts. While down somewhat, June contracts traded in a relatively stable range. While this unprecedented volatility is concerning, the greater impact to Texas will come if demand remains historically low for a prolonged period of time and supply gluts continue to strain storage capacity.

“Severance tax reductions would primarily affect the state’s Rainy Day Fund and State Highway Fund, and to a lesser extent general revenue available to meet budget needs. Contraction in the energy industry also will affect other sources of tax revenue, including sales and franchise taxes.

“The Texas budget is based on the average price of oil in each year of the biennium, thus daily market activity doesn’t significantly affect revenues, which are forecast based on average prices rather than spot prices or prices for specific futures contracts. That being said, given the historic nature of today’s market moves, we are carefully monitoring trading as June contracts come into focus. Should prices remain depressed over a long period of time, we anticipate the impact will be reflected in a reduction in the revenue forecast we’ll be releasing in July.”

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